Is Digital Banking Henry Ford's Faster Horse?

Tom Groenfeldt
, ContributorI write about finance and technology.Opinions expressed by Forbes Contributors are their own.

This year's the Digital Banking Report from Jim Marous is a record-setting 106 pages based on a crowd-sourced panel of 100+ financial services influencers combined with the results from a global research study of financial institutions. It identifies the key trends and strategies that will have the greatest impact during 2018.

The report says the top three trends for financial services firms in 2018 will be to remove friction from the customer journey, the improved use of data and advanced analytics and refinements in multichannel delivery. Their strategic priorities were slightly different — to improve the digital customer experience, better leverage customer insights and reduce costs.

Photo by Tom Groenfeldt

Henry Ford said customers would have asked for a faster horse.

Marous, who is also co-publisher of the Financial Brand, said the trends were the same as last year, except for one trend — testing and use of blockchain technology.

“The fact that the list of trends identified by the financial services industry has remained relatively consistent could be a symptom of a greater problem. The banking industry is moving much too slow, and legacy firms are failing to differentiate themselves.”

It could also mean that the banks are focused on their own issues — streamlining processes, reducing costs, and using data to pitch more products more accurately to consumers — creating a faster horse rather than developing something customers want, such as an automobile.

Missing among all the technical talk to AI, APIs, machine learning, big data and analytics was any sense of the customer, especially any sense of the customer as an active agent, or a larger view of the purpose of financial services in an individual’s life. My feeling, reading the report, is that banks and other financial institutions (FIs) are scrambling for better ways to push products at customers.

Marous notes that according to Forrester, “In a market where one-third of all customers say, ‘all banks are basically the same,’ it would make sense for executives and their teams to obsess over how to differentiate. Unfortunately, 2018 will look more like a digital arms race between warring incumbents than a year in which firms find new ways to specialize and create value for customers.”